Category Archives: Florida

Citizens Insurance Wants to Turn Me Into ‘Take Out’

Apparently, there’s still some chance to block Citizens Insurance company’s $350M part-loan part-giveaway program that involves a subsidy plan to use my premiums to pay private insurers to take over its policies. On the other hand powerful figures in the state GOP are lining up to support gifts to their friends.

My experience suggests the program isn’t necessary: although the program is not operating yet I’ve gotten my first letter of the post-hurricane season from a new, small, (fly-by-night?) insurance company called Homeowners Choice Property & Casualty (HCI) that has got me on its menu as “Take Out”.

“Take-out” is how Citizens refers to the policies cherry-picked by private insurance companies. And perhaps because I live relatively far from water and thus face less flood risk, I’m the cherry.

These letters follow a form. They have threats about how awful Citizens will be, threats founded in fact if skewed to the worst case. They are opt-out only: do nothing and I will be transferred to the new company about which I know nothing.

When I got the letter, HCI didn’t even disclose the terms of the policy they are offering me. Although the letter contains vague language about covering “other structures,” like gazebos, that I don’t happen to have, and mentions some “coverage options”, the real meat was supposed to be online. I was invited to go online to view financial info and see “a coverage comparison”. There is some financial information about HCI at Citizens’ “Take-out Companies” page, but when I visited last week, there was nothing about policy terms there. Checking back today, however, I find that there is now a summary coverage analysis document. Bottom line: very little difference — for now.

And of course there’s no reason to believe the premiums will be any less with any given company than with Citizens’: HCI is required to keep my policy for at least 10 years (unless they go broke first), provide “substantially the same coverage” as Citizens for the first three years, and limit rate increases to 10 percent per policy per year. Such comfort.

HCI’s homepage is not much use to me either. They tell me they are rated “A Exceptional” by Demotech, which is the rating agency for insurance companies too small to get a rating from AM Best. Looking at Demotech’s site, I find that “Exceptional” is only the third-best rating (everyone is waay above average here!), and means that according to some model (about which we are told nothing) Demotech thinks that 97% of the companies with this rating will be solvent 18 months from now. An A rating puts HCI in the top 70% of companies rated by Demotech. Yes, top 70%! (Not surprisingly, the Demotech ratings have been accused of being inflated.)

A little Internet searching tells me HCI just recently doubled in size by taking over policies from HomeWise, a failed insurance company. Was that before or after they got their rating?

Given that Governor Scott’s team, gripped by anti-government ideology, seeks to destroy Citizens Insurance by continually raising premiums and cutting coverage even though Citizens now has the $6+ billion reserves we always were told it would need to be solvent, I might actually be prepared to consider opting out some day despite my earlier reluctance. But I’d have to know what I was getting, and to have more confidence about the company I was going to than HCI has been willing or able to provide.

The track record so far for these insurance startups is sort of what I’d expect:

The granddaddy of onetime Citizens’ takeout companies, Poe Financial Group, was swamped with hurricane payouts and fell into Chapter 11 bankruptcy reorganization in August 2006 after storms caused more damage than it could cover. To pay for Poe, the state assessed everyone in Florida who buys homeowner or auto insurance. Lightning struck again with Magnolia Insurance, which was the biggest participant in a Citizens takeout program in 2009, the year before it went out of business. Another takeout firm, HomeWise Insurance Co., failed in 2011 and its policies were assumed by Tampa-based Homeowners Choice, which is the single-biggest takeout company participating in this round. Scott Wallace, the past president of Citizens Property Insurance, is now president of Homeowners Choice.

Looks like I’m opting out of this one too.

Update (10/11): Great article on some of the pros and cons of opting-out of Citizens from Tampa Bay Times. Where is the Miami Herald on all this? Fun fact: 30% of Citizens policy holders opted out last time letters went out — that’s a lot for an opt-out program. Citizens is cranking up the propaganda to reduce that number.

Posted in Econ & Money, Florida, Shopping | 5 Comments

Vote NO on Florida Constitutional Amendment 4

Just in case you were wondering, proposed Amendment 4 to the Florida Constitution is a Really Bad Idea.

Have a look at this analysis by the Center on Budget and Policy Priorities, Florida’s “Amendment 4” Would Cause Tax Rate Increases and Deep Local Service Cuts, Likely Harming the State’s Economy.

Vote No on 4 — in fact, if you don’t want the details, just vote NO on all the proposed constitutional amendments this year.

If, on the other hand, you’d like some nuance when looking at what the Legislature has wrought, please see my analysis of the 2012 Florida Constitutional Amendments. The bottom line is you should vote No on all of them except 11 & 12. I can understand why someone would vote for 2 & 9, but I’m not sure you should encourage this pandering tendency of the legislature.

Posted in 2012 Election, Florida | Leave a comment

I Hope It’s Not Too Little, Too Late

I’m happy to see there is at least a little pushback to Citizens Insurance’s outrageous recent financial misconduct: The Buzz reports that Lawmaker calls for audit of Citizens Insurance’s new $350 million loan.

Posted in Econ & Money, Florida | Leave a comment

A Bunch of Horrible Florida Constitutional Amendments

That’s what the Florida state legislature has served up for the public’s degustation on the ballot this November. Some of these proposed amendments to the Florida State Constitution could seriously damage the state for years to come. Others are pretty naked attempts to whip up the Republican base and get them to the polls in November.

Below I offer you links to the full text of the Amendments, and grade them on a 10 point scale for (Ir)Rationality, Evil, and Pandering. Points are bad.

Florida Amendment 1Health Care Services is a meaningless gesture of attempted state nullification of the mandate rule found in the federal Affordable Care Act (ACA). But if the ACA were ever repealed, the amendment would prohibit Florida from enacting Romneycare here.

  • (Ir)Rationality: 10. It doesn’t do anything. So long as the federal ACA is on the books, Amendment 1 is null and void due to the Supremacy Clause of the US Constitution.
  • Evil: 7. It’s against universal health care, a position which is certainly evil, but Amendment 1 doesn’t rate a 10 because it doesn’t actually do anything for now. Then again, Amendment 1 does have a small residual possibility of doing harm in the unlikely events that (1) the ACA is in fact repealed and (2) the state of Florida decides to copy Romneycare from Massachusetts, or do a state ACA, which are in fact more or less the same thing.
  • Pandering: 10. As this amendment won’t actually change anything, it amounts to a tremendous waste of effort and state money; this is nothing less than an abuse of the constitutional amendment process in the hopes of firing up the base in a swing state.


Florida Amendment 2Veterans Disabled Due To Combat Injury; Homestead Property Tax Discount This amendment increases the homestead exemption for disabled veterans.

  • (Ir)Rationality: 4. The state Constitution is a poor mechanism for this sort of fine-grained tax policy.
  • Evil: 2. These may be worthy beneficiaries, but cluttering up the Constitution with a relatively small tax policy aimed at maybe tens of thousands of people at most in a state as big as Florida is not a good idea. Also other disabled people might be equally worthy.
  • Pandering: 7. If the GOP legislative majority and GOP governor want to help disabled veterans, why not do it via legislation not involving the homestead exemption — which would be quicker and surer? Because this is so much more visible?


Florida Amendment 3State Government Revenue Limitation. This is a ‘starve the beast‘ amendment targeted at the state budget. It stops the Florida budget from growing faster than population increases plus inflation — regardless of what our needs might be, and working from the current severely deflated spending base.


Florida Amendment 4Property Tax Limitations; Property Value Decline; Reduction For Nonhomestead Assessment Increases; Delay Of Scheduled Repeal. This is another ‘starve the beast’ amendment, but targeted at local governments. This one cuts the rate at which assessments on real property can increase from the current cap of 10% per year to 5% per year. It also gives a bonus homestead exemption to so-called first-time home buyers but actually defines the group more broadly to include anyone who hasn’t owned a homestead property in Florida during the last three years. And there are other complex provisions designed to keep ratable value from rising to reflect the true value of homes. Florida Trend says Amendment 4 would cost local governments up to $600 million per year, money that in my opinion they would have no realistic hope of replacing. Which is undoubtedly the point. There is of course nothing in here about what should be cut, what will have to be cut, or alternate revenue sources.

  • (Ir)Rationality: 10. This is much more about killing local government than about helping homeowners. And even as a homeowner relief bill it’s not good policy: Annual 10% increases on the taxable value of a home may sound like a lot, but in fact it is only fair: there are many homes whose rateable value greatly lags the market value because they haven’t been sold in a long time. The effect of further shrinking the cap is to worsen an existing problem: two identical homes will be taxed at grossly different rates if one of them was recently purchased. That disparity means that the millage rate has to be higher than it otherwise would be, in order to make up the lost revenue. The disparity also depresses the market for homes, since taxes on new sales are so much higher than staying-in-place rates. Blocking increases in the assessed value of homes may help elderly people on fixed incomes, but it does so inefficiently — in part because the greatest benefits go to rich people, who have the most valuable, and likely to appreciate, homes! — at the expense of everyone else, especially young first-time buyers. There are far more efficient ways to help seniors on fixed incomes keep their homes. Like Amendment 11, for example.
  • Evil: 10. Say goodbye to local services. Sell off the public libraries. Worry about police, fire, trash. This will also hurt schools, already suffering from budget cuts, but no worries — Florida will give you vouchers for religious schools if Amendment 8 passes.
  • Pandering: 10. Who doesn’t like the sound of “property tax limitations”?


Florida Amendment 5State Courts. This is a mix of good and bad, with the bad greatly predominating. It gives the Senate the power to confirm Gubernatorial appointments to the Florida Supreme Court (I’d say that’s good, however the chips may fall). But it also gives the legislature the power to repeal court rules by a simple majority instead of the current two thirds (I’d say that’s bad). It prevents the Supreme Court from re-adopting a rule rejected twice by the legislature (I can see both sides of this, but on balance don’t think I like it). It changes the way the legislature can tinker with the Judicial Qualifications Commission’s rules to increase legislative power (clearly bad). Makes legislative witch hunts against Justices easier by increasing the House Speaker’s access to the Judicial Qualifications Commission’s files (very bad).

  • (Ir)Rationality: 4. There’s an evil logic at work here, but many of the changes other than the last one can be defended as increasing popular control (via the legislature) over the judiciary. Unlike most academics, I’m not against that. I do think, however, that the fine-grained level of the proposed intrusions is bad for the courts and bad for the public.
  • Evil: 8. What this is really about is intimidating Justices, and reducing access to courts for regular people.
  • Pandering: 2. This will read to most voters as technical. I don’t think this is a hot button issue for most people other than insurance company lawyers and the most ardent right-to-life voters.


Florida Amendment 6 – Prohibition On Public Funding Of Abortions; Construction Of Abortion Rights. There is at present no public funding of abortions, so this is another amendment whose main feature doesn’t actually change anything. This amendment would, however, entrench current policy against future popular majorities. Worse, by exempting abortions from the Florida Constitution’s privacy clause, the amendment would allow the legislature to enact a parental consent law twice held unconstitutional by the the Florida Supreme Court.

  • (Ir)Rationality: 0. Even though part of this is about entrenching a policy that doesn’t seem likely to change, it’s hard to call this amendment irrational since at least the anti-privacy part does have a real effect, one that could not be achieved without a constitutional amendment.
  • Evil: 10. Another attack on women’s rights, with extra added attacks on women’s privacy.
  • Pandering: 10. Surely the biggest get-out-the-vote amendment on the ballot, driven by a headline “Prohibition On Public Funding Of Abortions” which is about the part of the amendment that doesn’t actually change anything (at present).


Florida Amendment 7 – There is no longer an Amendment 7, as it fell by the wayside, making it feel like one of the best of the proposed Constitutional Amendments simply by virtue of not being on the ballot.

  • (Ir)Rationality: 1. One point for using up a number doing nothing.
  • Evil: 0.
  • Pandering: 0.


Florida Amendment 8 – Religious Freedom. The key words here are “deleting the prohibition against using revenues from the public treasury directly or indirectly in aid of any church, sect, or religious denomination or in aid of any sectarian institution.” In other words, let’s undermine the separation between church and state — in particular let’s subsidize religious schools. (Will anyone campaign against this by pointing out that the state will have to offer subsidies to Islamic schools — Madrassas! — too? Probably not.)

  • (Ir)Rationality: 5. The First Amendment to the US Constitution doesn’t prevent vouchers that parents can spend for religious schooling. This amendment to the Florida constitution would smooth the way towards introducing such a voucher system in Florida.
  • Evil: 8. This is part of the campaign against public education. The more middle class parents can be encouraged to leave the public schools, the easier it will be to starve them too. Vouchers do some good for poor families that want a religious option, but they also work as a subsidy to people who do not need the subsidy. More generally, I don’t think we win by eroding the church/state divide.
  • Pandering: 10. “Religious Freedom” sounds good, doesn’t it? We’re all for that. I’m actually surprised they got away with calling it that, given that the amendment is really about allowing state subsidies to religious institutions.


Florida Amendment 9 – Homestead Property Tax Exemption For Surviving Spouse of Military Veteran or First Responder. Much like Amendment 2: with a somewhat larger but still arbitrary class of beneficiaries.

  • (Ir)Rationality: 4. See Amendment 2.
  • Evil: 2. See Amendment 2.
  • Pandering: 8. Slightly more pandering than Amendment 2, since it is about widows (what about orphans, darn it?).


Florida Amendment 10 – Tangible Personal Property Tax Exemption. This would prevent counties, municipalities, school districts, and other local governments from taxing “tangible personal property” with a total assessed value over $25,000 but less than $50,000. This is a tax break for small businesses that are required to pay local taxes on computers and other equipment. Florida Trend says about 150,000 businesses would benefit from doubling the current $25K cap, and local governments would lose $20+ million per year.

  • (Ir)Rationality: 1. Small change.
  • Evil: 2. Small change.
  • Pandering: 5. I bet some businesses will be happier about saving on the paperwork than the $133 average they will save per firm. Perhaps some low-information voters will think this is about taxing them for their boats or expensive cars?


Florida Amendment 11 – Additional Homestead Exemption; Low-Income Seniors Who Maintain Long-Term Residency On Property; Equal To Assessed Value. This one would allow the Legislature to “allow counties and municipalities to grant an additional homestead tax exemption equal to the assessed value of homestead property if the property has a just value less than $250,000 to an owner who has maintained permanent residency on the property for not less than 25 years, who has attained age 65, and who has a low household income as defined by general law.”

  • (Ir)Rationality: 0. This one actually makes some sense. And the cost is very small: $9 million or so per year.
  • Evil: 0
  • Pandering: 0


Florida Amendment 12 – Appointment Of Student Body President To Board Of Governors Of The State University System. Currently students at FSU are cut out from participating in the selection of the student member of the Board of Governors of Florida’s State University System because FSU isn’t a member of the Florida Student Association, whose president has served ex offico. This amendment fixes the FSU problem, but at the price of cutting out the current intermediary, the Florida Student Association, entirely. Instead, the Board of Governors will have to set up a new body to serve as the intermediary that picks the student representative. While enfranchising FSU seems like a no-brainer, neither the prospect of duplication of functions nor the prospect of a standalone body whose sole function is to elect one of its own to be the Board member is particularly appealing. I suspect this will not enhance student representation.

  • (Ir)Rationality: 3. A lousy solution to a real problem.
  • Evil: 2. Surely there was a better way to solve this?
  • Pandering: 0. Whatever you think of the solution, it is a real problem.
Posted in 2012 Election, Florida | 4 Comments

Citizens Insurance to Use Our Premiums to Make GIFTS to Private Insurance Companies

The biggest local scandal of the week isn’t that a key witness in the latest David Rivera corruption case has vanished — shortly after being seen speaking with Congressman Rivera himself. That’s a doozy, but, no, the biggest scandal is a ballsy ripoff of insurance premiums paid in by Florida homeowners to state-sponsored home-insurer-of-last-resort Citizens Insurance Co. that is to be repurposed for the benefit of Republican crony capitalists.

Yes, while the Miami Herald front page was trumpeting the putative end of a relatively trivial abuse — top officials at Citizens Insurance were treating the travel budget as an unlimited personal extravagance fund — the real ripoff, one more than a thousand orders of magnitude larger, was being reported inside the paper.

A little background before the, ahem, money quote. Private insurance companies with actual capital, the ones that advertise on TV (Allstate, GEICO), won’t write homeowners insurance in much of Florida because they are too afraid they might have to pay out if a hurricane struck. To fill this void, the state of Florida created a back-up insurance company called Citizens. Citizens is far from perfect: it started out vastly undercaptialized, its customer service is lousy, and its rates are have always been high. But despite all these, it represents a deadly threat to the Republican world view because it is an example of government stepping in and solving a problem.

In the past few years the Citizens management, appointed by Republican Governors, has followed the following strategies:

It so happens, however, that the weather has been kind. And thanks to its ferocious rate increases, Citizens faced the terrible prospect of solvency this year. Having said for many years that it would need at least $6 billion in reserves to deal with an Andrew-sized disaster, Citizens reached that goal. Only someone who did not understand the Florida GOP would think that Citizens would react by cutting prices, or at least halt price increases. No, rather than congratulate themselves on their fiscal prudence, the Citizens board decided it would raid the piggy bank — or rather, hand over parts of it in gifts to its well-connected friends.

Here’s the money quote I promised you:

Citizens would take capital from its record $6.2 billion reserves and lend it — under favorable terms — to private insurers who agree to take over policies and keep them for 10 years.

The 20-year loans require interest-only payments during the first three years and are forgivable, in part, if hurricanes hit the state. Citizens acknowledges that the interest rate of about 1.6 percent “does not approximate the true market rate” for similar loans and that Citizens could be left unpaid if an insurer goes belly up after receiving a loan.

Critics, including several state lawmakers, called it a “sweetheart deal” for insurance companies and “corporate welfare” funded by the premiums collected from Citizens’ customers over the past several years. With no hurricanes hitting the state since 2005, Citizens has saved up a massive treasure chest of $6.2 billion, money that private insurers find attractive.

“I sat here and listened to the board today give out one of the biggest bailouts. Corporate welfare, I call it,” fumed Sen. Mike Fasano (R-New Port Richey), blasting Citizens for quickly approving the controversial plan without legislative input.

The plan, which was unveiled to the public on Thursday, was approved by the board on Friday in a unanimous vote.

Got that? Loan the money at below-market rates to unercapitalized private insurers on the grounds that by taking over some Citizens policies they reduce Citizens’s risk. But if in fact the private companies have to pay out — the risk that Citizen is supposedly reducing — then they can keep the money! So Citizens’s risk isn’t reduced at all…or at least not very much (depending on the details). This is not only immoral, but a vast dereliction of the fiduciary duty to the state and to the insured. But that’s business in Tallahassee. I bet we’ll see some of these new insurance company moguls on TV explaining how they built their own businesses, and complaining about how hard taxes make it for them to be entrepreneurial.

And let’s not forget this bit from the other day:

The proposal mirrors one presented in July by a lobbyist for Tower Hill Insurance, which currently insures more than 300,000 policies in Florida. Tower Hill and another insurer that lobbied for the program have already indicated that they would take over more than 180,000 policies if Citizens provides a multimillion-dollar incentive.

Tower Hill and other insurers interested in receiving a low-interest loan funded by Citizens’ surplus have committed to raising rates no more than 10 percent per year during the loan’s interest-only first three years. After that, rates could go up further.

“The insurance companies have hit the lottery,” said Rep. Frank Artiles, R-Miami. “They get no competition, they circumvent the Legislature and they get exactly what they want. “This is a classic Tallahassee get-rich-scheme that has bitten us in the butt before.”

Artiles contended that the program’s eligibility rules were written in ways that exclude all but a few privileged insurers, which are represented by Florida lobbyists.

But of course. No wonder the public got one day’s notice of the plan before it was rushed through.

Posted in Econ & Money, Florida, Politics: The Party of Sleaze | 3 Comments

Polling South Florida (July 2012)

One of the consequences of living in a swing state seems to be you get polled a lot. I’ve had five robopolls asking who I am voting for in the Presidential election in the last week. So far I’ve told the truth (not happy with Obama’s performance as President, definitely will vote for him, don’t like Romney at all & think he’s bad for the economy, I’m a liberal Democrat of a certain age).

But increasingly as I push the same boring buttons on my phone I feel the temptation to offer tactical answers. The problem, is, I can’t figure out how to shade my answers: Would it help to say I am a Republican who hates Romney? To say I’m older or younger? Would false answers be more likely to mess up the Romney or Obama decisions on how to spend their ad dollars? Do I want Romney to look less popular with his base than he is at the risk of Team Obama getting overconfident?

Of all the polls I’ve gotten this week only one was at all interesting. In addition to the usual demographic questions it asked if I was a veteran, and then what religion I was. The choices included Catholic, Protestant, Evangelical Christian [and there I was thinking that Evangelical Christians were Protestants], Jewish, Muslim, and Mormon. I picked Jewish. Then it asked me how often I go to church….

Meanwhile, regular reader Gustavo Sardina sends in the following account of a push poll he received.

Things to know (that the pollsters probably already knew), I am a registered republican, vote in every election, and live in Coral Gables.

It seems to be a push poll for Erik Fresen (my FL. House Rep.) targeted against his primary opponent Amory Bodin and went something like this:
Continue reading

Posted in 2012 Election, Florida | 4 Comments

SFDB Not-So-Random Thought Of The Day

I like this question from South Florida Daily Blog:

Florida law requires concealed carry weapon permit holders to be U.S. citizens. Just like voting laws.

So I’m wondering what the reaction would be from the NRA and the Republican Party if the Democrat Party led a purge of CCW permit holders much like Governor Scott has led a purge of voting rolls. You know, review the information contained in State databases and send letters to those CCW holders whose citizenship status could not be verified.

Posted in Florida, ID Cards | 7 Comments